Essay: Financial Institutions and Markets

Sample Essay

The financial crisis beginning in 2008 caused bankruptcies in many large companies, banks and financial institutions. These bankruptcies had a rippling effect on US and global economy and still continue to affect international economies and companies. The financial crises paved the way for debate regarding current and future state of investing and financing methods. The reliability and risk factors related to various securities, loans and mortgages became questionable and investors and financers started looking for alternate options of financing and investing to replace traditional finance devices.

One of the most popular securities are asset backed or credit backed securities which have been the security of choice for many banks, financial institutions and investors as these securities have the largest share in fixed-income market (Fabozzi, Bhattacharya, & Berliner, 2007). These securities have historically been backed by real estate mortgages and were the single most detrimental factor which caused the collapse of banks and escaladed the financial crisis. Subprime mortgages were commonplace right before the effects of financial slowdown started appearing where securities were backed by poorly valued assets and real estate. According to Ben Bernanke, Chairman of the Federal Reserve the future of mortgage and asset backed securities is quite bleak and steps have to be taken by government and financial institutions collectively in order to support mortgage backed securities (The Federal Reserve Board, 2008).

Kindly order term papers, essays, research papers, dissertations, thesis, book reports from the order page.